Goldman Sachs avoids consolidation among insurance companies in Portugal, for now

Some insurance companies operating in Portugal have admitted that they are available to move forward with consolidation processes, remaining attentive to any opportunities that arise in the market so that they can analyze their viability, but the North American Goldman Sachs does not expect movements in the national market, at least for one year. Those responsible believe that these transactions will take place mainly in the United States of America (USA).

“In Portugal, there have been important transactions in the past”, said Giorgio Albrecht, Head of Insurance coverage for Southern & Eastern Europe at Goldman Sachs Asset Management, in a conference call with journalists to present the “Global Insurance Survey 2024”, when asked about the possibility of consolidation movements in the insurance sector in Portugal.

More recently, the CEO of Mapfre Portugal, Luís Anula, admitted that growth in Portugal may involve acquisitions. “We are growing organically, but we are always analyzing the market to make acquisitions, we have studied in the past and continue to study acquisition opportunities, which is always the fastest way to grow”, he said, in an interview with Jornal Económico ( JE). “We analyzed many opportunities, but we did not materialize any,” he added, ensuring that he remains attentive to the market. “This year we will see what new opportunities arise for us to make acquisitions,” he said.

Giorgio Albrecht, however, does not see this happening in the near future. “We don’t see, at this moment, anything happening [no sector segurador em Portugal] in the next year. The USA is the main drivers consolidation in the insurance sector”, said the person responsible, adding that “Consolidation in the insurance sector has been a trend. We expect this trend to continue, but in the US we will see more consolidation than in Europe. In Europe it will take longer.”

In the survey, carried out between January and February 2024 among 359 CIOs and CFOs of insurance companies, which represent more than 13 billion dollars in assets, almost half of the respondents (45%) anticipate that the consolidation of the insurance sector will accelerate and generate a volume highest number of transactions over the next few years – an increase compared to the 37% who defended this perspective last year.

On the other hand, 51% of respondents expect industry consolidation to continue at the current pace, which represents a decline compared to the 54% who responded the same in 2023. Only 4% of companies expect a slowdown in consolidation among insurance companies, a decrease compared to the 9% expected last year.

The consolidation movement takes place at a time when insurance companies are facing other challenges, particularly in terms of digitalization and the use of artificial intelligence, but also in the face of the need to comply with ESG (environmental, social and governance) criteria.

Goldman Sachs concludes that, among respondents considering investing in this area, 86% prioritize environmental factors, while 35% highlight social factors and 33% are focused on governance. “In Europe, investment in ESG is at the top of insurers’ concerns,” said Giorgio Albrecht in the call with journalists.

According to Goldman Sachs, in addition to European countries, Asia also has this area among its priorities, with “95% of insurers in both regions identifying ESG factors as one of the many concerns in their investments”. On the other side of the Atlantic, the approach is different. “Although insurers in America do not identify ESG as the main drivermost include the criteria when making decisions about investments”, he concluded.